The catalytic power of compliance: evaluating the impact of China’s Personal Information Protection Law on corporate value chain upgrading

The global enactment of privacy regulations has intensified corporate compliance demands, creating a dual landscape of challenges and prospects for businesses in the digital age. We analyse the effect of China’s Personal Information Protection Law (PIPL) on corporate value chain upgrading by employing a staggered Difference-in-Differences design, integrated with Natural Language Processing and Large Language Model analysis. Analysing the panel data on A-share listed firms in China for the period 2012–2024, we show that the PIPL markedly accelerates value chain upgrading, a finding robust to a series of tests. Mechanism analyses confirm that this catalytic effect operates through three channels: driving digital transformation, advancing innovation capabilities, and enhancing supply chain resilience. Furthermore, the effect is particularly salient in privately owned enterprises, high-technology firms, and industries with greater market competition. Our findings underscore that regulatory compliance can be a strategic catalyst for industrial advancement, providing critical insights for policymakers aiming to leverage data governance for high-quality economic development.